M-03-01, Business Rules for Intragovernmental Transactions, Attachment A

Attachment A
Exchange Transactions

Business Rules for Intragovernmental Exchange
Transactions

Federal agencies that acquire goods or services from another federal
agency and federal agencies that provide goods or services to another
federal agency must obtain and use Dun & Bradstreet Universal Numbering
System (DUNS) numbers as unique business location identifiers. Each
agency may determine the organizational level for assignment of the
DUNS numbers below the minimum assignment level, which is the major
component or reporting entity. Each organizational level above the major
component or reporting entity must also obtain a DUNS number for identification
and consolidation purposes. Assignment at the regional location of each
major component or reporting entity is strongly encouraged to facilitate
reconciliation of intragovernmental activity and balances.

Federal agencies must register their DUNS numbers in the Central
Contractor Registration (CCR) database by January 31, 2003, and must
observe the requirements established by the system owner/manager, which
is currently within the Department of Defense. A registration template
will be provided separately.

Federal agencies are responsible for the accuracy of their respective
CCR registration data.

The business process rules and data architecture are effective on
January 1, 2003 on a “go-forward” basis. Augmentation of
existing unfilled intragovernmental orders will not be required.

Beginning on October 1, 2003, certain purchases for goods and services
that equal or exceed $100,000 per order or agreement must be transmitted
via the intragovernmental electronic commerce portal (portal). For orders
that are not transmitted via the portal, agencies may continue to use
existing methods and systems as long as the required data elements are
associated with the order. Additional information on the transactions
to be forwarded via the portal will be provided separately.

The threshold stipulated in rule #5 may be raised or lowered at a
future date.

These rules are effective for all intragovernmental purchases of
goods and services. Exceptions to these rules will be made for purchase
card acquisitions, for national emergencies, and for national security
considerations. The agency head (or his designee) may authorize such
exceptions.

When the requesting agency (or buyer) determines that a requirement
will be fulfilled by another federal agency, the requestor will prepare
and transmit an intragovernmental order (order) to the providing agency
(or seller). Negotiations between the business partners may take place
prior to the preparation of the order, and the seller may prepare the
order for the buyer. In addition to the order number, an interagency
agreement number may be assigned. However, the order number assigned
by the buyer will serve as the document control number. An agency may
not assign the same document control number to more than one order.

To ensure that order fulfillment and revenue can be associated with
a specific intragovernmental order, the seller must capture the buyer’s
intragovernmental order number in the seller’s order fulfillment
or non-tax revenue system to associate the buyer’s order number
with any agreement or control number assigned by the seller’s
system.

The order must be authorized/approved in accordance with existing
agency policies before transmittal to the seller. Necessary funding
information/citation must be included on the order.

An order may, on occasion, contain consolidated or summary information.
Additional information, such as a statement of work, occupancy agreements,
terms and conditions, specifications, etc., may be attached to the order,
if desired or necessary for order fulfillment and payment.

An obligation must be recorded in the buyer’s core financial
system prior to transmittal of the authorized order to the seller. If
the obligation number is different from the order number, then the obligation
record must include the intragovernmental order number and any interagency
agreement associated with the obligation. An intragovernmental order
will be deemed accepted when signed by both business partners, upon
transmittal to the portal by the buyer, or when the order is issued
in response to a quotation or proposal tendered by the seller.

When an accepted order is cancelled by the buyer, the seller is authorized
to collect costs incurred prior to cancellation of the order plus any
termination costs.

The standard data elements reflected in Attachment A-1 will be associated
with the buyer’s order record. The data elements to be transmitted
to the seller via the portal will be a subset of these standard data
elements and will be defined at a future date.

Electronic or hard copies of the order will be provided to administrative
or program offices responsible for ordering, acceptance, and payment.

Bills must be issued according to the terms reflected in the order
but not later than 10 days after delivery of the goods or services provided.

The standard data elements reflected at Attachment A-2 will be associated
with the seller’s billing record. The data elements to be transmitted
via the portal will be a subset of the standard data elements and will
be defined at a later date.

Consistent with voucher audit requirements that will be specified,
bills transmitted via the portal will be “examined” for
payment. Unless a dispute is initiated by the buyer within 10 business
days from the bill date, constructive acceptance will be deemed to occur,
and the portal will initiate the IPAC transfer automatically and route
the payment transaction to Treasury’s IPAC system. Notification
of this transaction will be sent to the buyer and the seller.

Billings for intragovernmental orders that are not transmitted via
the portal will be directly processed through Treasury’s IPAC
system. Only the responsible billing party may initiate the IPAC transaction.
Responsibility for initiating the IPAC transfer may be negotiated between
the buyer and seller, and the responsible billing party must be explicitly
stated on the order. If no responsible billing party is specified, the
seller will be deemed the party responsible for initiating the IPAC
transfer.

There will be no advance payments for service orders unless explicitly
required by law. Progress payments and periodic payments are permissible.

Advances will be permitted for orders for goods that exceed $1,000,000.
The advance may not exceed 50% of the order amount. Unless explicitly
required by law, there will be no advances for orders for goods that
are less than $1,000,000.

Advance payments made prior to the effective date of these business
rules will be subject to the rule requiring status reports.

For advance payments that are permitted, the buyer will record the
payment as an “advance to.” The seller will record the payments
as an “advance from” and will provide monthly status reports
to the buyer reflecting revenue earned. The buyer and the seller will
make appropriate adjustments to their respective advance accounts.

The use of budget clearing account F3885 as outlined in OMB Circular
No. A-11 is permitted under these rules.

In addition to other required elements, an IPAC transaction will
include the buyer’s order number, the DUNS number for the buyer’s
site location, the appropriation symbol for payment from (sender), the
seller’s bill number, the DUNS number for the seller’s site
location, and the appropriation symbol for collection by (receiver).

The buyer and the seller are expected to resolve any dispute within
30 business days of the billing date using existing dispute mechanisms.
If the dispute cannot be resolved using these mechanisms, then the matter
must be referred on the next business day to a dispute resolution task
force for a binding decision. Administrative costs and penalties may
be levied on the agencies involved in the dispute referral.

For intragovernmental orders that are not routed through the portal,
the cut-off date for issuing new intragovernmental orders for the current
fiscal year will be midnight on September 25 of that year (in order
to allow selling agencies to receive and record customer orders). For
orders that are routed through the portal, the cut-off date will be
midnight on September 30 as measured by the date/time stamp assigned
by the portal.

The cut-off date for new bills for each fiscal year will be midnight
on September 30 as measured by the date/time stamp assigned by the portal.
Revenue that is earned but not billed will be recorded as an accrued
asset and a detailed notification of the revenue recognized will be
provided by the seller to the buyer within 5 business days after the
end of each fiscal year. The buyer will recognize an equivalent expense
or asset and will record an accrued liability for the future payment.
There will be no intragovernmental, unbilled accounts receivable for
the seller at year-end.

Selling agencies are required to record an unfilled customer order
immediately upon receipt and acceptance of an authorized intragovernmental
order.